Results of the AMP4 (Asset Management Planning round 4) process have been written into the PRO4 (Periodic Review) outline for the water industry over the next five years. Can you tell our readers what thesignificance of AMP 4 and PRO 4 are?Q. Basically, the amount we can charge our customers is defined in PR04 and we have to construct our business plans (AMP4) based on that. It determines how much money we have to spend on all works.Price limits proposed by the water companies averaged 6.2%, but have been trimmed back by an average of 2% in the final Ofwat plans, who believed the water companies overestimate spending andunderestimated efficiency savings. Do you think this is fair, or will it restrict the work the water companies need to do?A. Southern Water’s initial submission was £2.2bn. Our initial award was for £1.4bn, which then rose to £1.7bn after negotiation. This represents a higher than average increase in water bills for our customers. For Southern Water this was a reasonably fair settlement. It means that major works can be fully financed, including projects at Margate and Broadstairs in Kent, Chickenhall Lane in Southampton and the newproject at Brighton and Hove. This last project will cost £200m and should start in 18 months. Brighton is one of only two beaches on the South coast that hasn’t got a Blue Flag. When this project is complete the whole South Coast will be clean for the first time in over a hundred years. It will certainly be worth the money. At the moment we are trying to get planning permission for a site at Peacehaven. The project had been planned under AMP 3, but we couldn’t get the planning permission.Q. And what about the improvements in efficiency?A. These are limited. Most water companies are already pretty lean as organisations. We can improve operating efficiency with more automation and I don’t think this was taken into consideration with the first award of £1.4bn. Much as I would have liked more, I think the £1.7bn is a sensible balance that will allow investment in automation and will ensure the main schemes can go ahead.Q. To what extent will panel builders benefit from your spending plans?A. Spending plans on Motor Control Centres and Systems Integration will be a minimum of £25m for the five-year period of AMP4. So that has to be good news for the companies who are on our framework.Q. How do companies get on your framework and can others join it at a later date?A. 18 months ago we advertised for panel builders to be part of our framework. Most of the major panel builders in the country tendered. There was a difference in what we asked for this time round - we wanted companies to be able to do both MCCs and system integration. Some panel builders went into partnership with SIs and quoted as a single company. We do rigorous quality and financial audits of all companies. It is important to us to ensure that all companies that we deal with are financial secure as we are committing to them for five years. At the end of this we were down to 12 companies. To get down to the last four we gave each company a sample of the panels that we currently have in use and asked them to quote for them. At the end of this round we chose four companies who were, MaxWright, MCS, Saftronics and Tyco Control Systems. These four are the only four who we will work with until 2010.With these four we have people who can do the smallest to largest systems and they all do integration in-house, which is ideal for us.Q. Do these four still have to bid for individual projects as they come up?A. No. We have encouraged them to follow the example set by Scottish Water, where six companies got together to form a consortium. Our four companies got together to form Southern Control Systems. Through them we can equalise prices, share out work and they can operate on common profit margins. This waymeans that we do not have to put every job out for tender and so saves everybody time and money. We use databases to control pricing and work load, which are a useful tool in themselves and are already being employed by other water companies.Q. Are there any new technology trends in the water industry?A. One trend is towards the use of intelligence. Southern Water, like other water companies, has trailed Siemens Simocode (intelligent overload) with Mitsubishi PLCs. In the future all new schemes will be intelligent as we aim to reduce costs without reducing engineering capability. Southern Water specifies what a system needs to do and Southern Control Systems decides how they do it and with what products, although I do sit on the electrical design group of the consortium. However, they are aware that we want to standardise on a limited number of products and suppliers. For example, we currently use about 30 types of PLC and we want to get this down to two or three. With this in mind it seems, at this moment in time, it is likely that the Siemens/Mitsubishi combination is the way to go for our intelligent systems.Another promising trial we are doing with Mitsubishi on two sites is with a web server for industrial PCs. This would give us full remote access to SCADA systems, and be another step in making our company even leaner.Q. Is legislation in the water industry up to date?A. WIMES (Water Industry Mechanical & Electrical Standards) sit along side our own specs at Southern Water. They have a rolling programme of updating these for individual equipment types that is determined by a steering group. These come around every two or three years. Personally I think this should be done every 12 months and we could then have a single document for the water industry that is updated every year.Another issue is the amalgamation of of the Electrical safety standard (BS 60204-1) and the type testing (BS 60439-1), which is not before time. This will particularly affect smaller panel builders who believe that all they need to do is build a panel to 60439, but then if it fits onto a machine it also needs to adhere to 60204. So combining the two will get round any confusion.
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